Ruling 2016-4, Sales and Use Taxes, Medical Equipment, Orthodontist

FACTS:

Orthodontists use custom-made aligners (the “Product”) to straighten a patient’s teeth. The orthodontist takes molds of the patient’s teeth and sends the molds to a third party that makes a series of trays to fit the patient. The trays are made of plastic that will gradually shift the patient’s teeth into alignment. The patient changes to a new set of trays approximately every two weeks until the treatment is complete.

Orthodontists routinely use various additional items in their practice, such as rubber clinical gloves and clinical masks worn in treating patients. Orthodontists also routinely provide dental care items to their patients to use during the course of treatment, including floss threaders, retainer cases, and interproximal brushes.

ISSUES:

1.      Are sales of the Product subject to sales and use taxes?

2.      Are purchases of gloves and masks worn by orthodontists and their staff during the treatment of patients subject to use tax?

3.      Are purchases of items that are given away by orthodontists to aid their patients with dental hygiene during the course of treatment subject to use tax?

RULINGS:

1.      Sales of the Product are exempt from sales and use taxes under Conn. Gen. Stat. § 12-412(19)(C) as equipment worn as a correction for a functioning portion of the body.

2.      Purchases of gloves and masks worn by orthodontists and their staff during the treatment of patients are exempt from use tax pursuant to Conn. Gen. Stat. § 12-412(91).

3.      Purchases by orthodontists of tangible personal  property that they intend to give away to their patients to aid with dental hygiene are subject to use tax.

DISCUSSION:

Retail sales of tangible personal property in the State of Connecticut are subject to sales and use taxes, unless specifically exempt. Conn. Gen. Stat. §§ 12-407 and 12-408. Sales of equipment worn as a correction or substitute for any functioning portion of the body are exempt from sales and use taxes. Conn. Gen. Stat. § 12-412(19)(C); Conn. Agencies Regs. § 12-426-14(5). The Department has long interpreted this exemption to include corrective devices used by dentists and orthodontists. Such items include, but are not limited to, braces, caps, wires, headgear, orthodontic mouthpieces, orthodontic brackets, bonding agents, retainers, and rubber bands used for braces. The Product is a form of braces that is used as a correction for the mouth, and so qualifies for exemption from sales and use taxes under Conn. Gen. Stat. § 12-412(19)(C).

Safety apparel designed to protect an employee from bodily harm is exempt from sales and use taxes. Conn. Gen. Stat. § 12-412(91); see Policy Statement 2004(4), Sales and Use Tax Exemption for Safety Apparel. Gloves and masks are used by orthodontists and their staff to protect against the transmission of infectious diseases during the treatment of patients. Accordingly, the purchase of these gloves and masks are exempt from use tax pursuant to Conn. Gen. Stat. § 12-412(91).

As stated above, retail sales of tangible personal property in the State of Connecticut are subject to sales and use taxes unless specifically exempt. Conn. Gen. Stat. §§ 12-407 and 12-408. There is no specific exemption for items used for dental hygiene. Therefore, items given to patients for at-home use are taxable to the orthodontist upon their purchase. If sales tax is not collected by the retailer on the sale of these items to the orthodontist, the orthodontist must self-assess the use tax due on the purchase of these items. See Informational Publication 2015(16), Q&A on the Connecticut Use Tax for Businesses and Professions.

LEGAL DIVISION
December 20, 2016